Will ASP Business Rise Again?

The "application service provider" market crashed and burned between 1995 and 2000. But many expect ASPs could achieve success in a second iteration, based on "cloud computing and software and computing resources provided "as a service."


GIA predicts the global market for "application service provider hosting services" will reach $129.4 billion by 2017. It isn't immediately clear what portion of that revenue might potentially be captured by telecom or cable service providers, though "cloud computing" has clear and positive implications for service providers, in large part because cloud computing requires high-bandwidth Internet connections, both fixed and mobile. 

GIA defines the application service provider (ASP) as a third party business that hosts, organizes and deploys application software from centrally located servers through internet on a lease or rental contracts. 

The big issue, for would-be providers of cloud services, is how much traction any new provider can get, since, by most estimates, most of the revenue will be earned by retail "renting" of business and consumer apps that in past years would have been counted as revenue for the packaged software providers. 

Customer Relationship Management (CRM) and industry specific applications are expected to be the main ASP applications, for example.  Industry specific applications, also known as vertical applications, are expected to be key applications for ASPs. It is not clear whether the overwhelming bulk of that revenue will continue to be earned by independent software vendors (some believe that will continue to be the case), or whether new distributors can grab significant market share.